At National Harbor, indie boutiques court tourists and condo-dwellers


Owner Elizabeth Mason in one of her Periwinkle stores, this one in National Harbor, Md. (Jeffrey MacMillan)
March 2, 2012

When hundreds of cheerleaders descended on the Gaylord Convention Center at National Harbor for a three-day convention last October, Kassie Rempel was ready.

Rempel, who owns the shoe boutique SimplySoles which opened its location there in 2010, typically deals in higher-end heels. But for the cheer expo Rempel stocked up on Tory Burch flip-flops. She held a give-away contest for a free pair.

“That did really well,” Rempel said.

Rempel and her fellow National Harbor retailers are learning the joys and quirks of being nestled near 3,000 hotel rooms and floods of tourists, but far from a Metro line and predictable foot traffic.

Small retailers have been hit hard by the recession, but some are finding success in these new urban villages. To capi­tal­ize on their location, they’re turning to new merchandising and promotional techniques to draw in both the visitors and the condo-dwellers who live just steps from their storefronts.

A management-intensive location

Heidi Kallett, owner of the stationery store Dandelion Patch, will open her fifth location in National Harbor on March 22. Her store in another mixed-use location, the Villages at Leesburg, is prospering, and she was eager to replicate that shop’s success, she said.

“The live, work and play model works for independent retailers,” she said. “National Harbor is a nice family venue that’s going to be a mini tourist attraction for local residents, too.”

Kallett began incorporating gifts into her merchandising strategy several years ago after realizing that stationery — a common purchase of brides-to-be — was too much of a one-time transaction.

“Maybe [the tourists will] be looking for something to take back with them, so I’ll feature more items with D.C. on the packaging,” she said.

It takes a seasoned retailer to flourish at National Harbor because the ebb and flow of guests at the complex changes with various conferences and attractions. And unlike most shopping centers, which draw customers from the immediate five-mile radius, a place like National Harbor depends on the nearest 30 miles or more, said Mark Menick, head of retail for the center’s developer Peterson Cos.

“One day there might be a dozen nurse practitioners inside the Gaylord and the next day we have a bunch of bankers,” Menick said. “It’s a management-intensive location because it’s different from a Monday to a Saturday to a rainy day to a Cirque du Soleil Day.”

Rempel said most of her business comes through catalog and online orders, so during big events and conventions she attempts to hook customers in person with the hope that they continue to shop online long after they leave.

And of course, she stocks her store with emergency convention-going supplies.

“We’ve brought in products to serve those people who were at a conference and realized they forgot their black heels,” she said. “Which happens more than you think.”

Mixed reports on mixed-use

Mixed-use developments, which incorporate residences with retail and nightlife, have been a growing trend in post-recession urban areas, said Jesse Tron, a spokesman for the International Council of Shopping Centers, more so than “lifestyle centers,” which tend to focus more on shopping.

“The benefits of having mixed-use with residential is you have built-in consumers,” Tron said.

Menick said the most prosperous National Harbor retailers see 15 to 25 percent sales growth each year. However, current research makes it hard to predict whether mixed-use developments overall bring in more customers than standard malls do.

For example, an analysis of 20 case studies by a Boston urban planner found that single-use shopping centers actually out-performed mixed-use centers during the most recent recession, despite their lack of adjacent hotels or apartments. On average, the study found, single-use shopping centers gained 3.7 percent tenancy and mixed-use clusters lost 7.4 percent.

The researcher, Caroline Edwards, a planner with the Community Opportunities Group in Boston, partly attributes the lackluster performance to the fact that the mixed-use centers examined were suburban and they lacked enough nearby residents to be self-supporting.

In a different scenario, Edwards said, the outcome might very well be different — as long as there were enough residents to support all the shops.

Not your parents’ mall

To add to National Harbor’s condos and town homes, this spring Bozzuto homes will start construction on a 371-unit apartment building at the site called the Esplanade. National Harbor’s retail spots are 88 percent occupied, with roughly two-thirds of those being independent retailers.

Storefronts at the complex go for roughly $35 to $40 per square foot, about on par with other retail areas in D.C., but Menick said some of those in prime spots pay significantly more, or less “if they were early pioneers — out there when we still had cranes.”

Peter Snell, director of the National Retail Group at Marcus & Millichap, said he believes the National Harbor’s clustering of retail with housing and nightlife fits a trend that appeals to the sensibilities of younger, wealthier consumers, who are more attracted to experiences than goods.

“The idea of having a grocery center with small, service-based, in-line shops — that’s something your parents would frequent,” Snell said. People in their 20s and 30s, “want bars and a scene, and they want to live right there.”

Being in an outdoor mall has its disadvantages in the cold winter months, when few desire to mill around by the water, but the summer makes up for it, Rempel said. The presence of other independent retailers creates more of a pull.

“Having [boutique clothier] Periwinkle there is a wonderful complement to our products,” she said.

To draw in residents who are immediate neighbors, Periwinkle owner Elizabeth Mason sends out promotions to the managers of the condo building upstairs. She also hosts parties with champagne and cupcakes for local residents. For tourists, her strategy is simply, “to treat them like a king.”

“We want to be sure that if they’re ever back in the area, they’ll visit us again,” she said.

Follow Olga and OnSmallBiz on Twitter.

This story is part of our special series on small business success, which will be featured in Capital Business on Monday, March 5.

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